U.S. Stocks Move Mostly Higher After Early Volatility

After turning in a relatively lackluster performance early in the session, stocks have moved mostly higher over the course of the trading day on Friday. With the upward move, the Nasdaq and the S&P 500 have reached new record intraday highs.

Currently, the major averages are just off their highs of the session. The Nasdaq is up 150.23 points or 0.8 percent at 18,338.52, the S&P 500 is up 23.59 points or 0.4 percent at 5,560.61 and the Dow is up 8.46 points or less than a tenth of a percent at 39,316.46.

The strength on Wall Street comes following the release of the Labor Department’s closely watched monthly employment report for June.

While employment jumped by more than expected in June, the report also showed downward revisions to job growth in April and May as well as another unexpected uptick by the unemployment rate.

The Labor Department said non-farm payroll employment shot up by 206,000 jobs in June compared to economist estimates for an increase of about 190,000 jobs.

However, the report also showed the increases in employment in April and May were downwardly revised to 108,000 jobs and 218,000 jobs, respectively, reflecting a net downward revision of 111,000 jobs.

The unemployment rate also rose for the third straight month, inching up to 4.1 percent in June from 4.0 percent in May. Economists had expected the unemployment rate to remain unchanged.

With the unexpected uptick, the unemployment rate reached its highest level since hitting a matching rate in November 2021.

Treasury yields have moved lower following the release of the report amid optimism the continued increase by the unemployment rate will convince the Federal Reserve to lower interest rates in the near future.

“On net, the job market looks considerably cooler in the June report than in May, and the unemployment rate at 4.1% is above where the median Fed policymaker projected it at year-end when they compiled economic projections last month,” said Bill Adams, Chief Economist for Comerica Bank.

“From the Fed’s perspective, the labor market isn’t soft enough justify an interest rate cut at this month’s meeting,” he added. “But the labor market’s cooling trend is quite clear. If inflation holds in its recent range, the Fed is likely to make an initial rate cut at the following decision, in September.”

Nonetheless, overall trading activity has been somewhat subdued on the day, as some traders remain away from their desks following the Independence Day holiday on Thursday.

Sector News

Gold stocks have moved sharply higher over the course of the session, resulting in a 2.9 percent surge by the NYSE Arca Gold Bugs Index.

The strength among gold stocks comes as the price of the precious metal has climbed to its highest levels in a month.

Significant strength has also emerged among software stocks, as reflected by the 1.2 percent gain being posted by the Dow Jones U.S. Software Index.

Pharmaceutical and retail stocks are also seeing notable strength, while energy stocks have moved to the downside along with the price of crude oil.

Airline, banking and steel stocks are also seeing considerable weakness, partly offsetting the strength in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. Japan’s Nikkei 225 Index closed just below the unchanged line, while China’s Shanghai Composite Index fell by 0.3 percent and Hong Kong’s Hang Seng Index tumbled by 1.3 percent.

Meanwhile, the major European markets finished the day mixed. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index dipped by 0.3 percent and the U.K.’s FTSE 100 Index slid by 0.5 percent.

In the bond market, treasuries have moved notably higher in reaction to the monthly jobs report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.5 basis points at 4.281 percent.